Developers' appeal to extend the Homebuilder Grant
- Posted By Pasang Sherpa
As thousands more apply for the $25,000 home builder grant to build new homes or renovate their homes, the federal government is expected to heed the calls of property developers and expand its HomeBuilder scheme beyond the December expiry date.
A swarm of new customers has been registered by developers across Sydney and Melbourne since the grants were implemented in early June, with a further 3,200 home builders and renovators applying in the past two weeks alone.
As of October 23, 14,599 HomeBuilder applications were submitted by state and territory revenue offices, up from 11,367 two weeks earlier. The federal government had not expected to record this many applications until mid-November.
"The current level of applications show HomeBuilder is off to a much stronger start than forecast," said Minister for Housing and Assistant Treasurer Michael Sukkar.
For new houses where the total house and land value does not exceed $750,000, government grants of $25,000 are eligible. The grant is also eligible for $150,000 to $750,000 worth of upgrades and knock-down rebuilds as long as the current value of the property does not exceed $1.5 million. For the person or couple applying, there are also income limits.
Property developers have been actively promoting their eligibility for the HomeBuilder program, and claim that the grants have fueled a drastic upswing in purchase operation. Although developers plan to extend HomeBuilder into next year, the government has not yet made a decision on the program's future. Government sources, however, told The Sun-Herald that an extension was being discussed. In the December mid-year budget update, any proposals will most likely be announced.
Andrew Whitson, Stockland's community chief executive, said the boost was a "powerful stimulus" to help the Australian economy and sustain construction employment during the pandemic-induced coronavirus recession.
"We saw very strong demand for residential lots and townhomes in the months following the announcement of stimulus and customer enquiry levels remain elevated," Mr. Whitson said.
Currently, developers want the federal government to expand the scheme beyond its current end date of December 31.
However, in Queensland and Western Australia, where demand has been especially high, he warned, some home builders are struggling with capacity problems. The official statistics of Western Australia's application are not high, this is possibly due to a decision by the revenue office to approve applications after the foundations have been laid or the property title is released, while applications are made after contracts have been signed-in other states.
In NSW, more than 2900 applications for HomeBuilder have been made, of which 1900 were for new homes. Victorians have made nearly 5100 applications, including 4100 for new homes. There were 3514 applications in Queensland and a further 718 in Western Australia.
The $25,000 has so far been paid by around 10 percent of Home Builder applicants. Some construction milestones must be completed in order to obtain the money, and additional documentation is required to prove eligibility beyond the initial application.
Several construction firms said that it was often difficult to satisfy the government mandate to start construction within three months of signing a new building or home renovation contract.
"We encourage the government to consider an extension of the scheme nationally, including an extension of the construction commencement window, to allow more people to access the scheme and further extend the economic impact of the stimulus," Mr. Whitson said.
Mario Biasin, chief executive of Metricon, said that the website of his company had a record number of visitors after the Homebuilder boost program, as well as high numbers of visits to view homes. In Victoria, NSW, Queensland, and South Australia, Metricon manufactures homes.
He agreed on the end date in December "really doesn’t allow much time for keen home buyers to act". "It makes sense to extend the grant to maximize its intended benefit not just for the construction industry but also for the overall economy of Australia," he said.
AVID Property Group chief executive Cameron Holt said there was an 83 percent rise in the number of deposits for the business between June and October compared to the same time in 2019. More than a third are intending to access the HomeBuilder grant. AVID is selling homes across NSW, Victoria, and Queensland.
"However, with population growth expected to fall next year and the HomeBuilder grant in its final months, now is the time to extend the grant into 2021 and bridge the gap before activity rapidly falls ... impacting the economy and local jobs," he said.
Mr. Holt said new buyers had responded positively to the scheme with "demand for land clearly highlighting that many buyers are taking advantage of the opportunity".
This demand along the eastern seaboard has prompted the company to spend $200 million worth of investment to release new packages of houses and land ahead of schedule, with some selling out within a week of launch.
Mr. Sukkar said the grant was "igniting the construction industry and helping to protect jobs" in the sector.
SOURCE:
Duke, J., 2020. The Sydney Morning Herald. [Online]
Available at: https://www.smh.com.au/politics/federal/government-set-to-heed-developers-calls-to-extend-homebuilder-grant-scheme-20201031-p56aaj.html?utm_medium=Social&utm_source=Facebook&fbclid=IwAR2QklYl30fR2GKGtixF18pIztc11Y2bc0LF43FAjUrvTPgFToFonB3Yqa0#Echobox=1604